Business Excellence and EFQM Fundamental Concepts of Excellence

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Table of Contents

Introduction
Literature Review
Business Excellence
EFQM Fundamental Concepts of Excellence
Comparing Business Excellence with EFQM Fundamental Concepts of Excellence
Conclusion and Recommendations
References

Introduction

The concept of business excellence has been existence for decades as firms struggle to find ways of delivering quality products and services to their customers. Oriana, Pepper, and Stewart (2018) define business excellence as “outstanding practices in managing an organization and achieving results, all based on a set of eight fundamental concepts, all based on a set of fundamental concepts or values” (p. 56). It is a deliberate effort by a firm to embrace specific practices and values that would ensure that they meet the expectations of their clients in the best way possible. In an environment where the marketplace is becoming increasingly competitive, it has become necessary for firms to find ways of improving their operations to remain sustainable. Customers have become very demanding, knowing that they have options when planning to make their purchases. The European Foundation for Quality Management, popularly known as EFQM, is one of the business excellence models, which have become popular over the past few decades. In this review of the literature, the focus of the researcher is to discuss the concept of business excellence and draw the comparison with the EFQM.

Literature Review

During the industrial revolution, a few large corporations dominated various industries and the competition was not a major issue they had to deal with in their normal operations. Their concern at that time was to ensure that they deliver products to their customers. However, that trend changed after the end of the Second World War (Calvo-Mora, Picón-Berjoyo, Ruiz-Moreno, & Cauzo-Bottala, 2015). As technology improved, many firms from different countries emerged, keen on dominating the global market in their respective industries. As competition became stiffer, firms came to realize that their operations had to be customer-centric (Badrick, Wienholt, Ross, & Gray, 2019). They had to deliver high value to their clients, at the most competitive price possible. The concept of business excellence and related models such as EFQM emerged out of the desire to deliver the best value to the market.

Business Excellence

Business excellence models emerged out of the belief that a firm can maintain continuous improvement in its operations as it seeks to achieve success in the market. In a global marketplace, a firm must ensure that its products meet world-class standards to manage the competition. Sternad, Krenn, and Schmid (2019) argue that the model allows firms to embrace practices and beliefs relevant to the country where they operate. It means that a firm operating in the United Arab Emirates may apply the model differs from another in the United States, because of the difference in socio-economic and political factors in the two countries. However, the model has eight basic principles that should be taken into consideration when a firm is applying the model. They include the following:

Results orientation

When using this model, one of the most important factors that a firm must focus on is the need to ensure that its activities are result oriented. The team of employees must understand the ultimate aim of the firm, and measures put in place to achieve them (Tickle, Mann, & Adebanjo, 2016). They have to understand how they can use resources made available to them to achieve the best outcome. Ladzani (2016) explains that business excellence emphasizes the need for a firm to deliver on its promises to the customers.

Customer focus

Operations of a firm must always focus on meeting or even exceeding the expectations of customers. In a market where competition is stiff, it is crucial for a firm to embrace customer-centric strategies. It must understand the changing tastes and preferences of its customers, their purchasing power, buyer decision-making processes, and any other factor relating to customers (Soni & Kodali, 2016). Embracing customer-centric approaches creates an outward-in approach to developing products. Instead of creating a new product and assuming that it will be popular among customers, the firm conducts market research to understand the prevailing needs, and then develops a new product that meets these needs.

Leadership and constancy of purpose

Leadership is another fundamental value that must be taken into consideration when using this model. Ioannis, Koulouriotis, and Emiris (2018) argue that a team is as good and as successful as the capabilities of its leader. The attitude and values that a leader instills on its team define their level of commitment and creativity in the workplace. A leader should define the path that their team should take but at the same time allow team members to be creative when undertaking various activities. Zárraga-Rodríguez and Álvarez (2014) also note that a leader should remain faithful to the purpose of the organization. These principles enhance the ability of a firm to achieve success in the market.

Management by processes and facts

The model encourages management practices based on processes and facts. It is common to find cases where a manager makes decisions based on emotions or rumors. Such decisions are always counterproductive. It is important for those in leadership to base every decision they make and action they take on facts and organizational processes to enhance organizational stability (Bandyopadhyay & Leonard, 2016).

People development and involvement

One of the most important principles when using this model is the need to maintain people’s development and involvement. Employees should be empowered through regular training to make sure that they can work effectively in a changing workplace environment. The management should also ensure that they engage these employees in decision-making processes, especially when the firm is planning to introduce a new system of operation (Jankal & Jankalova, 2016).

Continuous learning

Business excellence cherishes continuous learning by employees as a way of maintaining the production of quality goods and services. In a world where technology is introducing new concepts and practices, a firm cannot afford to remain static. It has to adopt new practices (Ladzani, 2016). The only way of embracing the new systems and practices is through continuous learning among employees. They have to learn about changing customers’ tastes, changing operational practices, and the best way of embracing diversity (Badrick et al., 2019).

Innovation and improvement

Innovation is one of the best ways of improving the organization’s performance. Creating an innovative environment helps to create new ideas and developing them into new products or practices. Employees should not only be allowed to come up with new ways of operation but also be supported in their innovative endeavors. Creating innovation centers within a firm helps to promote continuous improvement in terms of the quality of products delivered and cost of operations (Bandyopadhyay & Leonard, 2016).

Partnership development

Proponents of business excellence model believe in maintaining a partnership with other firms as a way of promoting excellence. Sometimes it may be necessary for a firm to work closely with its rivals to overcome common problems in the market (Jankal & Jankalova, 2016). It may also be prudent to form a business partnership with suppliers (Badrick et al., 2019). Suppliers can only maintain their operations if their customers are experiencing sustainable growth. As such, it is in their interest to ensure that this firm remains successful.

Public responsibility

Finally, this model encourages the management not to ignore the role of the public in its operations. They are the opinion shapers and their view can have a significant impact on the operations of a firm (Jankal & Jankalova, 2016). Engaging in regular corporate social responsibilities may help in improving the relationship between a firm and members of the public. It creates a feeling that the firm is not just interested in profits but also the need to engage in social responsibilities (Ladzani, 2016). Employing members of the immediate community may be another strategy of maintaining a close relationship with the public.

EFQM Fundamental Concepts of Excellence

The European Foundation for Quality Management developed fundamental concepts of excellence focused on improving the quality of operations among firms. This foundation was concerned about the ability of firms from emerging markets of Japan and China to deliver quality products at a relatively low cost compared with European firms. As such, it became interested in helping local firms to lower their cost of operations while improving the overall quality of their products to enable them to compete favorably in the global market. Figure 1 below identifies the eight principles upon which this model is based.

Figure 1. EQFM’s fundamental concepts of excellence (Jankal & Jankalova, 2016, p. 78).

Adding value to customers

The primary concept of excellence under EFQM is the need to add value to customers. A firm should remain committed to a continuous improvement of its products. As technology keeps changing, the main concern of a firm should always be how to create more value for the clients. Ladzani (2016) explains that if a company is producing food products, it should strive to improve the nutritional value of its goods while ensuring that they pose minimal threat to the customers. The goal can be achieved by maintaining regular research in food production.

Creating a sustainable future

When a firm is enjoying success in the market, the management should not forget the fact that future forces may be disruptive and if care is not taken, an organization can be forced out of the market. As such, it is necessary to create a sustainable future by embracing innovations (Soni & Kodali, 2016). A company should be capable of foreseeing the future and finding ways of aligning its operations appropriately. Bandyopadhyay and Leonard (2016) argue that one of the best ways of creating a sustainable future is to maintain a team of highly innovative employees who are always ready to embrace change. The firm should also have the financial strength to deal with different market forces that may affect its future operations.

Developing organizational capability

Developing organizational capability is another fundamental concept of EFQM. The capacity of an organization depends on the skills and competencies of its individual employees (Oriana et al., 2018). Organizations are currently keen on hiring a team of highly talented employees who can deliver the desired results. Developing the capability within an organization starts with hiring experienced and talented workers. Once they are hired, Ladzani (2016) explains that they should be taken through regular training sessions to sharpen their skills further. The firm will also have the responsibility of retaining them through attractive remunerations and creation of an effective workplace environment.

Harnessing creativity and innovation

Proponents of EFQM believe in creativity and innovation as some of the best practices when it comes to business excellence. Badrick et al. (2019) hold that creativity is not a unique attribute to the most learned and those in top management positions. Junior employees who interact regularly with customers and those who are on the operations floor understand challenges that they encounter and are in the best position to develop innovative ideas of addressing them. They should be empowered through regular training and their ideas taken seriously to help enhance success within a firm.

Sustaining outstanding results

When using this model, the management should understand that success is a process. When a company is registering impressive results, the concern of the management is to devise ways of maintaining such a desirable output (Jankal & Jankalova, 2016). The leadership of the firm should be aware of what it is doing right to achieve such results and then determine measures that should be taken to maintain the current level of success.

Succeeding through the talent of people

The model also holds the belief that a firm can only succeed through the talent of its employees. The management should train its employees to work as a unit when undertaking different activities (Calvo-Mora et al., 2015). They should also learn to take advantage of the talents and strengths of their colleagues in addressing their own weaknesses. Such level of coordination and the ability of a company to allow its workers to exploit their skills are critical in enhancing success.

Managing with agility

This model appreciates the importance of management in enhancing excellence within an organization. It encourages management with agility as one of the best ways of promoting success (Soni & Kodali, 2016). The management should remain alert and keen on identifying different opportunities in the market. Once an opportunity is identified, the management should act swiftly. The concept is based on the belief that early adopters are the ones that often benefit from a new concept in the market.

Leading with vision, inspiration, and integrity

Those trusted with positions of leadership must understand that they have a critical role to play in enhancing excellence in the normal operations of a firm. First, a leader should have a vision of what should be achieved within a given period (Oriana et al., 2018). They have to learn how to share their vision with their junior officers to make it a reality. The leader should then inspire its workers towards the realization of the vision. Finally, the leader should always remember to maintain integrity at all times. Zárraga-Rodríguez and Álvarez (2014) believe that integrity enables a leader to gain the respect of employees and other stakeholders.

Comparing Business Excellence with EFQM Fundamental Concepts of Excellence

The review of literature above demonstrates that EFQM fundamental concepts of excellence are closely intertwined with business excellence principles. They share so many factors on how to promote excellence within an organizational system. One such principle is leadership. Both models hold that success can only be achieved if an organization has the right leadership. The vision of the leader defines the path that an organization takes, and their ability to inspire employees defines the capacity of a firm to achieve the set goals and objectives. Ladzani (2016) explains that employees can only embrace integrity if the person in the top leadership position cherishes the value. When the leader is corrupt, chances are always high that junior employees would embrace the same unethical practices.

Innovation is another factor that both models cherish when it comes to promoting business excellence. Soni and Kodali (2016) believe that as competition in the market becomes stiff, it has become necessary for firms to be innovative in their operations. They need to design unique ways of operation that would lower costs and increase margins, while improving the overall quality of products delivered to customers. Creativity and innovation also make it easy for a company to take advantage of emerging technologies to outsmart its rivals in the market. The management should create an environment where employees can nature their ideas into products or new operational practices.

Customer-centric practices are also enshrined in the two concepts. Ladzani (2016) says that one of the common mistakes that many firms commit is to focus on making profits within the first few days of their operation. The study holds that organizations should focus on meeting customer’s needs in the best way possible. As tastes and preferences change, a company should find a way of adjusting the nature of its products to match the new needs. According to Bandyopadhyay and Leonard (2016), maintaining customer-centric values ensures that a firm remains focused on continuous improvement of its products. Embracing new production methods can also help in lowering the cost, making it possible to charge competitive prices.

Talent management is another crucial factor in enhancing excellence, according to the two models. Jankal and Jankalova (2016) state that excellence entails delivering the best at all times, and that requires a team of highly trained and talented employees. They should understand the expectations of the market and the capacity of the firm. Maximizing the capabilities of the firm enables it to deliver the best results in the market. According to Zárraga-Rodríguez and Álvarez (2014), the management has a responsibility of scouting for the best talents in the job market, even if it means poaching them from rival companies. Once such talented employees are hired, measures such as offering them attractive remuneration and create a good workplace environment should be taken to ensure that they remain within the organization.

Conclusion and Recommendations

The concept of business excellence has become relevant in the current competitive business environment. As shown in the literature review above, the ability of a firm to succeed in the market today depends on its capacity to meet the market needs in the most cost-effective manner possible. The comparison of the business excellence model and EFQM fundamental concepts of excellence shows so many similarities. Factors such as effective leadership, talent management, continuous learning, customer-centric practices, creativity and innovativeness, integrity, and adoption of emerging concepts are critical in enhancing excellence. A company should consider the following as it strives to embrace business excellence in its operations:

It is important to embrace creativity and innovativeness within a firm. The changing trends in the market require a firm to redefine its operational practices and products that it delivers to the market.
Effective leadership is one of the most critical elements of business success. Those who are trusted with the position of management should strive to maintain integrity and have a clear vision on how to enhance success.
A company should strive to have a team of highly skilled and talented employees. Once employees are recruited, they should be maintained by offering them attractive salaries and providing a room for them to apply their skills.

References

Badrick, T., Wienholt, L., Ross, J., & Gray, J. (2019). From compliance to excellence: The RCPAQAP and the Australian business excellence framework (ABEF). The Journal of the Royal College of Pathologists of Australia, 51(1), 107-108.

Bandyopadhyay, P. K., & Leonard, D. (2016). The value of using the Baldrige performance excellence framework in manufacturing organizations. The Journal for Quality & Participation, 2(1)10-14.

Calvo-Mora, A., Picón-Berjoyo, A., Ruiz-Moreno, C., & Cauzo-Bottala, L. (2015). Contextual and mediation analysis between TQM critical factors and organizational results in the EFQM Excellence Model framework. International Journal of Production Research, 53(7), 2186-2201.

Ioannis, N. M., Koulouriotis, D. E., & Emiris, D. (2018). Economic crisis and business excellence: A comparative multi case study assessment. International Journal of Quality & Reliability Management, 35(4), 914-939.

Jankal, R., & Jankalova, M. (2016). The application of the EFQM excellence model by the evaluation of corporate social responsibility activities of companies. Procedia Economics and Finance, 39(1), 660-667.

Ladzani, W. (2016). Benchmarking the South African excellence model against world-class best practice business excellence models. Environmental Economics, 7(4), 8-17.

Oriana, M. P., Pepper, M., & Stewart, M. (2018). Lean six sigma and the Australian business excellence framework: An exploratory case within local government. International Journal of Lean Six Sigma, 9(2), 185-198.

Soni, G., & Kodali, R. (2016). Path analysis for proposed framework of SCM excellence in Indian manufacturing industry. Journal of Manufacturing Technology Management, 27(4), 577-611.

Sternad, D., Krenn, M., & Schmid, S. (2019). Business excellence for SMEs: Motives, obstacles, and size-related adaptations. Total Quality Management & Business Excellence, 30(2), 151-168.

Tickle, M., Mann, R., Adebanjo, D. (2016). Deploying business excellence: Success factors for high performance. International Journal of Quality & Reliability Management, 33(2), 197-230.

Zárraga-Rodríguez, M., & Álvarez, J. M. (2014). Does the EFQM model identify and reinforce information capability? Social and Behavioral Sciences, 109(8), 716-721.

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